Smt. Jamuna and Others vs The Joint Registrar of Co-Operative Societies, The Mahila Co-operative Bank Ltd. and Jayaramu

B.S. Patil, J.—This writ petition is filed challenging the judgment dated 22.08.2013 passed by the Karnataka Appellate Tribunal, Bangalore, dismissing Appeal No. 256/2007 filed by the petitioner and confirming the order passed by the Joint Registrar of Co-operative Societies, Arbitration Dispute, Bangalore. The 2nd respondent - Mahila Co-operative Bank Ltd., Vijaynagar, Bangalore, filed a dispute before the Joint Registrar against the petitioners herein seeking an award for a sum of Rs. 16 lakhs with interest, urging that the said amount reflected the principal and interest accrued thereon which was the result of the loan advanced in favour of the petitioners herein for the purpose of construction of school building. It was contended by the 2nd respondent-Bank before the Joint Registrar that the loan agreement entered into between the petitioner and the bank stipulated for payment of 15% interest and in default of payment of installments, additional-2%, penal interest was provided for. This document was produced and exhibited as Ex. P-6(a) before the Joint Registrar. The document evidencing the execution of an equitable mortgage by deposit of title deeds was also produced before the Joint Registrar by the Bank.

Based on the agreement and the document evidencing deposit of title deeds, the Joint Registrar passed an order on 20.03.2007 holding that the petitioners had indeed availed loan of Rs. 16 lakhs by mortgaging their immovable properties and that they had defaulted in discharging the loan, in as much as, they were in arrears in a sum of Rs. 15,48,742/- and that they were liable to pay the said amount along with interest at 17.5% with costs of the proceedings. This order was challenged in appeal before the Tribunal.

The Appellate Tribunal has confirmed the order passed by the Joint Registrar with a modification that interest shall be reduced from 17.5% to 17%, as what has been agreed in the agreement is interest at 15% along with additional interest at 2% in case of any default committed in discharging the loan, which would come to 17% and not 17.5%.

Mr. Krishnappa, learned Counsel for the petitioner, at the outset, submits that there is no such agreement reached between the parties, wherein 2% additional interest over and above 15% is agreed to be paid by the petitioners to the respondent-Bank. He further places reliance on the judgment of this Court in the case of The Sangli Bank Ltd. Vs. Chandrashekar Channabasappa Karchi and Others, , to contend that when the loan is not availed for commercial purpose, interest cannot be levied at 17%.

Counsel appearing for the respondent-Bank makes available the copy of Ex. P-6(a) produced before the Joint Registrar, to contend that the petitioners have indeed agreed- for payment of 15% interest along with 2% penal interest in case of default, for the default period. He further points out that the judgment reported in The Sangli Bank Ltd. Vs. Chandrashekar Channabasappa Karchi and Others, , has no application to the facts of the present case.

Having heard the learned Counsel for both parties and on consideration of the materials on record, I find that as per Ex. P-6(a), petitioners have agreed to pay interest at 15% along with additional 2% in case of any default for the period of default. Therefore, the first contention urged stating that the petitioners have not agreed to pay penal interest at 2% cannot be accepted.

In so far as the contention urged based on the judgment of this Court in Sangli Bank''s case, it has to be stated that the said judgment arose out of the suit filed in O.S. No. 61/2003. While disposing of a Regular First Appeal, this Court dealing with the provisions of Section 34 CPC and the discretion of the Court in awarding interest on the amount from the date of decree to the date of payment, found that as the loan amount was borrowed for construction of a house and not for any commercial purpose, keeping in mind, Section 34 CPC, lesser interest awarded in the suit was sustainable.

The facts and circumstances involved in this case are different. It cannot also be said that the loan availed for the purpose of constructing a school building is not for commercial purpose. Petitioner has filed this petition on wrong assertion of the fact that they had not agreed for payment of interest at 15% and the levy of 2% interest was unauthorized. This assertion of the petitioner is belied by the document produced as Ex. P-6(a) before the Joint Registrar. Therefore, petitioners cannot invoke the extraordinary jurisdiction of this Court under Articles 226 & 227 of the Constitution of India, with baseless and false assertions.

In the light of the above, I am of the view that the petitioners cannot be extended any benefit of reduction of interest in this case. Hence, this writ petition being devoid of merits, is dismissed.